Financial Inclusion Top of Mind for U.S. Financial Leaders

Rhea-AI Summary

Experian has released a study revealing that financial inclusion is a major focus for banks, with 60% believing expanded data can improve credit access. The study shows that 25% of banks have implemented financial inclusion plans, while 67% are in progress. It highlights the importance of data, with 62% of lenders planning to use alternative data for better credit decisions. Most programs target new credit users (46%) and low-income consumers (41%). Challenges include technology and internal education gaps.

Positive

• 25% of banks have implemented financial inclusion plans.
• 67% of banks are working on financial inclusion strategies.
• 62% plan to use expanded data to improve credit access.

Negative

• Two-thirds of respondents cite lack of technology as a barrier to executing financial inclusion strategies.
• 56% of businesses need greater internal education about diversity and inclusion benefits.

New study commissioned by Experian finds most banks are focused on driving financial inclusion; nearly 60 percent believe expanded data can improve access to credit

COSTA MESA, Calif.--(BUSINESS WIRE)-- Financial inclusion is a primary focus for nearly all banks and financial institutions according to a new commissioned study Experian® released today conducted by Forrester Consulting. The study highlights lenders’ plans to make financial products and services more affordable for consumers across the United States and shows one-quarter of banks have financial inclusion plans up and running with over two-thirds in the process of implementing financial inclusion strategies.

In addition, the study reinforces the role expanded data plays in increasing access to fair and affordable credit. In fact, sixty two percent of respondents stated the use of additional data sources can improve access to credit for consumers and 60 percent plan to use advanced analytic technologies, machine learning and AI in credit decisions to support their financial inclusion strategies.

“We believe this research confirms our industry is heading in the right direction and that financial inclusion is a top priority for lenders across the U.S.,” said Greg Wright, executive vice president and chief product officer, Experian Consumer Information Services. “Leveraging data and technology to drive financial inclusion is job number one for us. We have the right insight, teams, products and technology in place to help our clients reach their financial inclusion goals, overcome challenges and, most importantly, increase fair access to credit for underserved consumers.”

According to the study, many lenders view financial inclusion as a way to engage new audiences and better serve their existing customers. Today’s financial inclusion programs are primarily focused on those new to credit (46% of programs), followed by low-income consumers (41% of programs) and small businesses (40% of programs). Secondary targets are customers with no or thin credit files (38% of programs) and the unbanked/underbanked (34% of programs).

Data that drives inclusion

The study also explored lenders’ perceptions about the most valuable data sets for risk assessment. Sixty-two percent of financial institutions use or are planning to use expanded data to improve risk profiling and credit-decision capabilities with the following data sets considered most helpful to supporting financial inclusion strategies:

• 64% banking data
• 57% cash flow data
• 52% employment verification data
• 51% asset, investments and wealth management data
• 51% alternative financial services data
• 36% telcom and utility data

Reaching new heights with Experian and guest Forrester

While financial inclusion is a top priority for many, other organizations still face barriers. Two-thirds of respondents said not having the right technology, data, and talent in place to execute a financial inclusion strategy were the greatest challenges faced. In addition, 56 percent of businesses said they need greater internal education about the benefits of diversity and inclusion.

Those interested in learning more about the “Reaching News Heights Together with Financial Inclusion” study and the tools available to implement and track financial inclusion programs are invited to join a live webinar hosted by Experian and featuring Forrester on Tuesday, May 24, from 10 – 11 a.m. PT.

For more event details, please visit: https://us-go.experian.com/reaching-new-heights-together-with-alternative-data-to-drive-financial-inclusion-webinar

Experian’s commitment to financial inclusion

Experian has championed the use of expanded data sources and their ability to drive more equitable access to credit for many years. According to Experian’s research, when advanced analytics and machine learning are combined with expanded data sets – including trended data, rent and public records as they are with Experian’s Lift Premium™ score – 96 percent of applicants can be scored, including an estimated 65 percent of the credit invisible population and the entire conventionally unscoreable population. This is significantly greater than the 81 percent of consumers that can be scored by conventional scores. In addition, 6 million consumers whose conventional scores are subprime could be upgraded to near-prime or above based on the expanded data used in the score.

Innovations like Experian Lift® complement Experian Boost™¹ – a free feature that launched in 2019, which allows consumers to contribute positive telecom, utility and video streaming service payments directly to their Experian credit report for an opportunity to instantly improve their FICO Score®. Earlier this year, Experian launched Experian Go™ to help credit invisible consumers establish an Experian credit report and potentially get their first FICO Score® in minutes. More than 30,000 consumers have created a credit report through the program to date.

To learn more about how Experian can help you achieve your financial inclusion goals, visit https://www.experian.com/business/increasing-financial-inclusion.

About Experian

Experian is the world’s leading global information services company. During life’s big moments — from buying a home or a car to sending a child to college to growing a business by connecting with new customers — we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.

We have 20,000 people operating across 44 countries, and every day we’re investing in new technologies, talented people and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.

Experian and the Experian trademarks used herein are trademarks or registered trademarks of Experian. Other product or company names mentioned herein are the property of their respective owners.

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¹ Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220511005377/en/

Amanda Garofalo

Experian Public Relations

1 714 460 3739

amanda.garofalo@experian.com

Source: Experian

FAQ

What does Experian's study say about financial inclusion?

Experian's study indicates that financial inclusion is a top priority for banks, with 60% believing expanded data can enhance credit access.

What percentage of banks have implemented financial inclusion strategies?

According to the study, 25% of banks have financial inclusion strategies in place.

How do banks plan to use data in relation to credit access?

The study reveals that 62% of lenders plan to utilize expanded data for improving credit decisions and access.

What challenges do banks face in implementing financial inclusion?

Two-thirds of banks reported that a lack of the right technology and internal education on diversity are major challenges.

When was Experian's financial inclusion study released?

Experian released the financial inclusion study on May 11, 2022.